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Smokers and Obese to Pay More for Healthcare – Fair? Sound Off

by Darwin on April 3, 2011

Last week, a controversial proposal was put forth by the governor of Arizona looking to recoup some of their Medicare program costs. In essence, smokers and the obese will pay a $50 annual fee; diabetics that don’t improve their health could face a similar penalty. For some reason, this only appears to affect childless people which doesn’t make a lot of sense to me, but I digress. There are many sides to this debate, so here are some thoughts:

Unhealthy People Do Cost More

This bothers people, especially those who are a drain on the health care system resources, but it’s obviously true. It’s not appropriate to vilify someone born with a disorder or someone who suffers from some sort of malady they acquire later in life, but the fact is a small portion of the population consume the a disproportionate percentage of healthcare dollars. So, the natural question is – should they pay more?

Penalizing People for Their Health?

It’s pretty messed up to be assessed a higher fee for something out of your control if it’s you though. So, if you’ve had diabetes since you were a child, you should have a higher charge for healthcare? How about if you’re a woman? Medical expenses are higher for women than men over a lifetime. So, women should pay more? Much depends on perspective. If you’re the person paying more, you feel like this is totally wrong. If you’re trying to be completely objective and looking purely at the cost component, it might make sense to basically charge people solely based on actuarial risk.

The Whole Point of Insurance Is To…

Cover outliers. You buy car insurance so that in the rare circumstance that you cause an accident, your costs will be covered by other people with a perfect record. You are also then compensated by someone of no means who had the minimum insurance required and companies even offer uninsured driver insurance for accidents. We all buy homeowner’s insurance but don’t expect our house to burn down. The intent of an insurance pool is to use actuarial statistics to present a reasonable profit to the administrator while imposing appropriate fees to various participants depending on their risk. But these risks are often muted, or merged so people aren’t too far outside the norm. This has traditionally been the problem with private insurers providing insurance for someone with a chronic health condition. Chances are, there’s no premium this individual could pay that would ever cover the cost of their care – so insurers just refuse to provide coverage!

$50 Fee Is A Laughable Waste

I don’t see the point in assessing a $50 charge. Primarily, the millions of dollars the state will have to spend defending lawsuits, promoting this legislation and then administering it will be a net loss. $50 per year isn’t going to deter anyone from smoking or being unhealthy. Seriously. $4 a month to stop smoking? Others might have just bought a vaporizer since it seems to be the trend now because of its health benefits than smoking (Check this G+ profile to learn more about handheld vaporizer) Cigarette taxes go up constantly and people keep smoking. $4 is one fat burger. It’s a joke. States should either do nothing – or enact a penalty commensurate with the actual cost component of the behavior they’re trying to change.

Personally, I’m all for incentivizing people to take better care of themselves. Our poor health is bankrupting the country, make no mistake. I just don’t think this will be effective. We also shouldn’t be vilifying people that happen to be unhealthy whether through their own fault or not. We should get real about the cost-effective delivery of healthcare, get real about the level of service the government can and should provide, and incentive better outcomes rather than just penalize people with the equivalent of a latte per month.

I have been morbidly obese in the past. (I lost over 100 lbs a few years ago to finally get to a healthy weight). I have to admit that although most obese people like to make excuses (it’s in my genes, it’s my thyroid, etc.) the truth is that the vast majority of obese people are obese by their own actions. I know .. I’ve been there. Very few people REALLY have thyroid issues or genetic obesity issues.

Having been one of the morbidly obese before, I actually do support an additional fee on those who are extremely overweight, those who smoke, those who drink, even (and yes, I still drink alcohol). If you are going to indulge in “at risk” behaviours (including not taking care of your weight, smoking, and drinking) then you should pay more for the “privilege”. Just as if you ride a motorcycle, you pay more insurance or if you’ve been in accidents before, you pay more insurance. (And I ride a motorcycle, too.)

It’s a matter of personal choice. It’s not a penalty … because you can choose to avoid it.

Thanks for your perspective. I agree that people respond to incentives – positive or negative. Curious about your thoughts on 50 bucks per year. Would that have had any bearing whatsover on your changes? Or were they totally self-imposed for unrelated reasons?

My changes were totally self imposed and had a lot to do with other things going on in my life at the time as well.

Having said that, and despite my earlier answer, I don’t think $50 would make a huge difference to most people. I think what would make a bigger difference is things like allowing a gym membership to be counted as a health care expense, and therefore deductible or for one to be covered in part or whole by insurance as a “wellness” benefit.

The problem with penalizing the overweight, is that, as you said, it vilifies people and encourages the fat-hate that you see in so many places. Yes, for most people being overweight is a choice they make in what they eat and how little they move … but it’s just not as easy as people think to change the habits of a lifetime. When you’re healthy and reasonably fit, saying “get up and move more you fat slob” is easy. But doing it is really really really hard.

Insurance is to mitigate risk. I pay a premium to someone to cover my risk of something happening to me that has the chance of costing me more then I can cover at that moment. The issuer’s job is to assess the risk of actually drawing on the policy, and then sets a premium that will allow him to make a profit on his risk.
I bring this up for two reasons. First, it does make sense to charge more to those who present higher risks to those fronting the money. Second, you called it health insurance. However, what you are discussing is pre-paid health-care (in theory, though, again, it’s not that really, it is socially paid health-care). Real insurance doesn’t mean you go out, get in an accident and then buy insurance expecting the insurer to cover you costs that you incurred before paying for said costs (any more then you can retroactively put your money on 13 at the roulette board and expect the casino to pay you.) I personally would love to find a health insurer who would let me insure myself against catastrophic financial losses related to unexpected health issues. Unfortunately, I am required to pay for health care that I never use (doctors visits, stupid and useless medicines that I would never take and any other health care thing that I could, should, and do pay out of pocket but other expect the health “insurer” to cover). Why? Because legislatures have deemed that I am to stupid to choose what health-care I want to insure myself for.
And, to answer your general question, I think Medicare and it’s like should be torn down and probably burnt to the ground. Maybe have salt poured over it afterward. But, if we as a society are stupid enough to promise people some level of health-care, then we as a society can also set whatever standards we wish on the definition/cost/coverage of said promise.

Sounds like a plan hatched by a “revenue enhancement” government worker. I agree with you, the unintended consequences of this move will eat up any projected “revenue”. As for the morality of taxing people for engaging in activities of their own choice…….. bah! It leads down a path of stupidity and government over-reach (but I repeat myself). Might as well start levying fees for any type of risky activity which *might* lead to medical expenses: mountain climbing, parachuting, scuba diving, etc.

I can see the argument for both sides but I’m leaning more towards charging people for risky behavior. My insurance is higher because my car is not as safe as others, I’m charged less because I’m a healthy male. I think it makes sense but where do we draw the line? As 101 Centavos pointed out there are so many risky behaviors that we choose to act in with our own free will.

I think they should pay more too. But you’re right, what next? We’ll have the technology to predict health over the long term soon. Do people with genetic marker that predispose them to diabetes pay more too? It’s going to be a huge discussion in the future.

That will always be a slippery slope since not within their control and certain genetic markers may make someone “predisposed” to certain maladies but you can’t tax them into compliance, whereas a smoker, obese, etc. you could entice better outcomes with financial penalties hypothetically.

I think medical insurance should reduce rates for healthy behavior or increase it for unhealthy behavior. It is just like automobile or life insurance. The incentive if big enough may change behavior or penalty for unhealthy behavior to change. I rather see health insurance do more about identifying early signs of disease to avoid expensive care. Avoiding type 2 diabetes, obesity, cancer, heart attack, stroke, etc would be very cost effective. If it cannot be avoided entirely, at least managed.

The concept is sound. Legislating it would be difficult since the majority of the voting block is – obese! So, we’d be expecting the majority to vote against their own interests. As we’ve seen during recent election cycles, you get elected on promising to give stuff away, not take it away.